Small Beer from Big Breweries

It’s no secret that Big Beer (Miller, Anheuser-Busch, Coors) isn’t sanguine about the success of craft and regional breweries—Small Beer, for short—in recent years. As Brooklyn Brewery brewmaster Garrett Oliver recently wrote in a New York Timesop-ed, “The age of American industrial brewing is over.”

Oliver, in fact, was writing to express his lack of concern over the recently proposed merger of Miller and Coors. “While industrial beers suffer flat or declining sales, craft brewers are experiencing double-digit growth,” Oliver wrote. “The big brewers now try to copy craft beers.” They certainly do: Wild Hop Lager is produced by a subsidiary of Anheuser-Busch, Green Valley Brewing; Leinenkugel and Henry Weinhard’s Private Reserve are now owned by Miller; and Blue Moon, famously, is made by Coors.

But a few days ago, an article in the Wall Street Journal spelled out exactly how well that strategy’s working—and the numbers might concern Oliver. “Sales of craft beers affiliated with the big three brewers,” as the Journal carefully puts it, are up almost 45 percent over last year. Meanwhile, actual craft beers are up just under 16 percent—not an insignificant increase, of course, but far less proportionately. In part, that’s because the faux craft brands started the year with lousy numbers. But it also reflects a fundamental truth of the beer business: Distribution is everything. As the Journal writes, “[T]he big brewers have far larger distribution networks than independent brewers do. If a mass-market brewer wants to add a new brew to its lineup, it can more easily attract an audience for it.”

The big breweries say their marketing strategy isn’t deception. The chief marketing officer of Coors says the fact that his company brews Blue Moon is “no more relevant than Kashi (cereal) being owned by Kellogg or Lexus being owned by Toyota.” And interestingly, a few craft brewers even applaud the success of these beers, according to the Journal: “[T]hey’re bringing new legions of craft drinkers into the fold. Even if the independent brewers’ market share falls, they may enjoy higher sales and profits as the category grows.”